Tata Motors Passenger Vehicles expects rising commodity costs to put further pressure on margins, with the impact in the current quarter potentially equivalent to around 3% of revenue, even as the automaker launched its new Aeris compact sedan on Friday in an effort to tap the personal-car market.
The company had already faced a commodity cost increase equivalent to around 4% of revenue in the April-June quarter, compared with about 2% last year, managing director and CEO Shailesh Chandra said. The latest increase comes amid geopolitical uncertainties that have pushed up input costs over the past five to six months.
“In Q1 we had mentioned that it was about 4% of revenue as the commodity increased. And last year we faced about 2%. This quarter would also be a significant increase in commodity price,” Chandra said, adding that the additional impact could be around 3% of revenue, with a variation of 0.5 percentage points.
The company, however, has been unable to fully pass on the increase in input costs to customers at the same pace, putting pressure on margins.
“The concern for us as a business is that it is not possible to pass on these increases to the market at the speed at which the prices have increased,” Chandra said.
The company does not plan to take a price hike in the middle of the festive season, although Chandra indicated that further increases could be necessary.
The automaker is therefore looking to accelerate cost reduction while taking progressive price increases to partly offset the higher input costs. “You are forced to take progressive price increases and residual you are taking as a margin impact,” he said.
The comments come as Tata Motors Passenger Vehicles seeks to strengthen its product portfolio with the launch of the Aeris, its new sub-four-metre compact sedan. The Aeris replaces the Tigor in TMPV’s personal-car portfolio, while the Xpres-T continues to serve fleet customers.
The model has been launched at an introductory price of Rs 5.29 lakh for the petrol version and Rs 6.29 lakh for the CNG version, ex-showroom. Bookings opened on Friday, with deliveries scheduled to begin from October 11.
The Aeris is being positioned as an alternative for personal buyers looking to upgrade from hatchbacks, particularly in the high and premium hatchback price bands. Tata Motors is targeting a compact-sedan market of around 3.5 lakh units annually. The segment has increasingly come under pressure from SUVs, although Chandra said it had grown around 25-26% in volume over the past year.
Personal buyers account for around 65% of the compact-sedan market, with fleet customers making up the remaining 35%, Chandra said. CNG accounts for nearly 60% of industry compact-sedan volumes.
Chandra also reiterated the company’s focus on electric vehicles. He said that the demand for its EVs continue to outpace supply. EV penetration in its passenger-vehicle portfolio has risen to around 25% this year from about 14% last year, he said.
The company sold a record 16,549 EVs in August, taking sales during January-August to 93,164 units, already above the 81,125 units sold during calendar 2025.
Chandra said monthly EV production capacity has more than doubled from around 7,500-8,000 units last year to more than 16,000 units currently. However, supplier capacity remains a constraint as vendors need advance production schedules to expand output.
Chandra said EV penetration could have crossed 30% if the company had sufficient supply, suggesting that production constraints were limiting the share of EVs in its sales.
At the industry level, EV penetration has risen to around 8% from 4.5% last year and could reach double digits next financial year, he said.